The Hindu Business Line : Jewellers head to Dalal Street

In demand: The improved performance of a few listed jewellery players in recent times on the back of revival in demand for jewellery from the US seems to have set the tone for new issues.

Suresh P. Iyengar

Mumbai, March 18

All roads seem to be leading to the capital market for jewellers , going by the number of initial public offerings by the jewel makers. After a lull for almost two years, jewellery companies are vying to tap the capital market.

Following Madurai-based Thangamayil Jewellery's successful IPO launch last month, Shree Ganesh Jewellery House, which is headquartered in Kolkata, has taken the plunge this month to raise about Rs 360 crore.

Mumbai-based Goenka Diamond and Jewels is waiting in the wings to tap the market in next few days.

“The industry is getting more organised and we expect investors to give us the right valuation,” said Mr Umesh Parekh, Managing Director, Shree Ganesh Jewellery.

Drawing a parallel between the textile readymade segment and jewellery making, he said just the way people moved away from tailors to branded wear, they are now more comfortable buying branded jewellery than going to a goldsmith.

The improved performance of a few listed jewellery players in recent times on the back of revival in demand for jewellery from the United States, seems to have set the tone for new issues, said an analyst. Over half the global jewel sales is in the US.

Prices

Despite volatility in gold prices, India's gold jewellery exports in February jumped 37.51 per cent to $714 million (Rs 3,306 crore), compared with the same period last year, largely due to revival in demand from the United States, according to Gem and Jewellery Export Promotion Council

The overall export of gems and jewellery was up 55 per cent at $2252.54 million (Rs 10,436 crore) in February. Similarly, cut and polished diamonds exports rose 60 per cent to $1370 million (Rs 6,348.61 crore).

On Thursday, Thangamayil Jewellery gained three per cent to hit a record high of Rs 80, while Renaissance Jewellery jumped 18 per cent to Rs 88, Gitanjali Gems rose one per cent to Rs 116 and Suraj Diamonds was up three per cent to Rs 48. However, Suashish Diamond lost three per cent to Rs 290 and Shrenuj & Co fell by one per cent to Rs 38.

Credit rating agency, Crisil has recently said with the increasing demand and efficient capital utilisation by gems and jewellery players in India will strengthen their balance sheets over the medium term. Efficient working capital management helped Indian companies arrest significant deterioration in the companies' liquidity after the credit crisis in second half of 2008.

Crisil expects players operating in the value-added jewellery segment, which commands higher margins to weather the downturn well because of their ability to absorb losses.

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